Report: States’ Medicaid Spending To Spike After Loss of Stimulus Funds

State Medicaid spending is expected to increase by an average of 29% in fiscal year 2012, the biggest increase in the program's history, according to a report by the Kaiser Commission on Medicaid and the Uninsured, Kaiser Health News reports.

Nearly every state has moved to reduce Medicaid spending this fiscal year, after a funding boost from the 2009 economic stimulus package ended in June 2011 (Galewitz, Kaiser Health News, 10/27). The stimulus package provided nearly $100 billion in federal funds to help state Medicaid programs cope with the economic downturn (California Healthline, 6/16).

More than half of state officials who responded to the annual survey said there was a 50% chance their Medicaid programs would face budget shortfalls in FY 2012, while enrollment continues to increase (Aizenman, Washington Post, 10/27).

The federal health reform law requires states to maintain Medicaid eligibility and enrollment standards through 2014, when an estimated 16 million U.S. residents will be added into the program. However, states are permitted to cut optional Medicaid benefits (California Healthline, 10/25).

All 29 Republican governors have written to lawmakers and the Obama administration to request relief from the "maintenance of effort" requirement. Mike Schrimpf, communications director for the Republican Governors Association, said, "Every year Medicaid takes up a greater share of most state budgets. ... Every dollar spent on Medicaid necessarily comes out of somewhere else, so it's taking away from every other item in the budget" (Washington Post, 10/27).

Other Survey Findings

The survey also found that:

• In FY 2011 and FY 2012, 18 states reported eliminating, reducing or restricting benefits, and commonly made cuts to dental, medical supplies and durable medical equipment, and personal care services;
• Five states in FY 2011 and 14 in FY 2012 increased copayments or imposed new copays on beneficiaries;
• 46 states plan to lower provider payment rates in FY 2012, while 39 did in FY 2011; and
• 24 states in FY 2012 will have and 17 states in FY 2011 increased the number of beneficiaries in managed-care programs (Kaiser Health News, 10/27).

The report also noted that potential cuts to Medicaid included in proposals before the debt panel could put additional pressure on state budgets (Quinton, National Journal, 10/27).